Trumpcare and Medicaid

How Medicaid Is Impacted Under Trumpcare (BCRA – Better Care Act)

Updated 6/23/2017

The biggest change to Medicaid will come in how it’s funded according to the Better Care Act, which was just announced on 6/22/2017. Under current law and for as long as the program has existed, Medicaid gets funded on an open-ended system from federal and state governments. Whatever a state spends on Medicaid, the federal government matches it at least dollar for dollar. In 2016, the U.S. spent over $553.4 billion on the program collectively. Combined with the Children’s Health Insurance Program (CHIP), Medicare and ACA tax subsidies, Medicaid accounted for about a quarter of the federal budget in 2015.

The Senate bill proposes cutting funding in significant ways, effectively putting the program on a spending budget for the first time in its history. For starters, states could choose from one of two funding options: per-capita or block grants. Rather than the open-ended system that exists now, states would get a set dollar amount per program or per beneficiary based on history of expenditures. The problem here is that health spending varies per year, sometimes widely. New drugs and treatments might come out that increase healthcare costs. Without federal matching, states might have to avoid costlier treatment options or limit who gets treatment.

Changes to Medicaid funding could save the federal government about $800 billion over the next decade according to a Congressional Budget Office analysis released on the House healthcare bill in May. These changes could also force millions of people off of the program due to budget cuts.

Medicaid Eligibility Under Trumpcare (BCRA – Better Care Act)

The Affordable Care Act expanded Medicaid eligibility nationwide, but states could choose whether to expand their programs. To date, 31 states and the District of Columbia expanded Medicaid eligibility. Under the ACA, people who earn up to 138 percent of the federal poverty level can apply for coverage. Before Obamacare, income limits were typically set at 100 percent or below the poverty line, and eligibility was generally restricted to certain covered groups, including children, people with disabilities, the elderly and pregnant women.

Under the Senate bill, Medicaid expansion would be rolled back over the next six years. By 2020, no new enrollees would be able to join under expansion guidelines. States would continue to get federal funding at a reduced rate (dropping 5 percent each year) until 2023, at which point funding ends for expansion altogether.

Medicaid Work Requirements Under Trumpcare (BCRA – Better Care Act)

Republicans have long been pushing for work requirements under Medicaid, a feature that they believe would cut down on fraud and abuse of the system. The Better Care Act gives states the ability to require Medicaid recipients to work. Exemptions include pregnant women, the disabled and students. States could define the work requirements, both in terms of what counts as work and how long someone would need to work to meet eligibility. Under current law, Medicaid recipients do not have to work to obtain benefits.

Planned Parenthood

Under the ACA, federal money cannot be used to fund abortions unless the mother’s life is in danger, or the pregnancy is a result of rape or incest. The Hyde Amendment, issued shortly after landmark Supreme Court case Roe v. Wade, has limited federal funding for abortion since the 1970s and remains in effect today. The Affordable Care Act also prohibits federal funding for abortions.

On a state level, abortion coverage requirements vary, which is why some states allow health plans on the marketplace to cover abortion while others don’t. Tennessee and Louisiana, for instance, take the strictest stance against abortion by not allowing it to be covered under any marketplace plan regardless of circumstances.

Because Planned Parenthood gets reimbursed by Medicaid for a lot of its preventive services, cutting Medicaid would already affect a large percentage of the women who go there for care. However, the Senate bill takes it a step further. The organization would be defunded for one year under the BCRA. Similar to the House bill, the bill from the upper chamber seeks to limit how much federal funding goes to Planned Parenthood.

President Trump and other Republicans have been vocal in their opposition to the organization, and they are actively trying to defund it for good. Moderate Republicans, such as Senators Susan Collins of Maine and Lisa Murkowski of Alaska, object to the provision, claiming that they won’t vote for a bill that defunds Planned Parenthood.

The Future of Medicaid Under Trumpcare

Right now, about 20 percent of Americans are covered by Medicaid. If funding gets cut, states may be forced to tighten eligibility requirements or limit covered medical services. Republicans argue that putting Medicaid on a controlled budget will encourage states to develop innovative ways to bolster their own programs. Opponents of the Senate bill and Republican healthcare reform in general claim that the bill takes a draconian approach to healthcare for the poor. The CBO estimate on the House bill in May found that about 23 million more people would lose health insurance under Trumpcare than under the current law, many of those as a direct result of cuts to Medicaid. The BCRA cuts back funding for the program even faster than the House bill’s proposal.

Donald J. Trump’s healthcare reform outline states in Step #6 that the Federal Government should no longer provide financial support to the states to fund the Medicaid program. President-Elect Trump believes that there’s a lot of fraud, abuse and financial misuse happening in the Medicaid program today and that if the states were responsible for funding the program entirely, they would get that fraud and waste under control.

President-Elect Trump also anticipates that the number of people on Medicaid would decrease as the economy improves and people start earning more money and get better jobs and inevitably become ineligible for medicaid based on their higher earning. It is unknown how long he believes this would take before a large percentage of those on medicaid return to the workforce and obtain employer provided health coverage. It should be noted however that a large percentage of those receiving medicaid benefits are Americans actually working full time jobs, but who simply can not afford employer sponsored coverage.

How is Medicaid funded by the Federal Government presently?

The Medicaid program is funded by a number of different sources.

The first way that the Medicaid program is funded through the Federal Medicaid Assistance Percentage (FMAP). This is a payment that the Federal Government allots to the state that depends on the amount of money that the state spends on the Medicaid program. At the bare minimum, the Federal Government will pay $1.00 for every dollar the state spends. For states made up of citizens with an overall negative growth rate in overall incomes in a given year, the Federal Government will give more money to the state under FMAP because it would mean that, hypothetically, more people in that state are being covered by Medicaid. If a state has a more positive growth rate in incomes in a given year, the Federal Government may not give more than the standard $1:$1 bare minimum ratio.

The second way that the Medicaid program is funded is through the Affordable Care Act. As previously explained, if a state voluntarily chose to expand the eligibility requirements for the Medicaid program, meaning that consumers who earn less than 133% of the Federal Poverty Level will be able to enroll in Medicaid coverage. If a state did expand the eligibility requirements they also received more funding from the Federal Government. Under the law, the Federal Government will pay for 100% of the costs associated with the now newly eligible Americans – those who make between 100% and 133% of the Federal Poverty Level. This full reimbursement is not indefinite and will slowly step down over the years starting in 2016 until 2020 when the Federal Government will only reimburse the states for 90% of the costs associated with the newly eligible Americans to the Medicaid system.

The third way that the Medicaid program is funded is by Medicaid Disproportionate Share Hospital Payment. This is a payment made to hospitals that offer a lot of medical assistance to Medicaid and uninsured Americans to make up for the lack of or lower payment they receive for those services. This payment also ensures that there are hospitals that will continue to provide quality care to Medicaid recipients.

The final significant way that the Medicaid program is funded is not actually by the Federal Government, but rather by state funds that are allotted to miscellaneous projects and programs.

About Medicaid And The Affordable Care Act

Medicaid is a program administered and managed by the states to provide health insurance coverage to low income consumers. Before the passing of the Affordable Care Act, also known as Obamacare, the cutoff to receive coverage under Medicaid was approximately 100% of the Federal Poverty Level. Obamacare called for all states to expand Medicaid and allow people who made under 133% of the Federal Poverty Level to receive coverage. It also required Medicaid to expanded to all groups of low income Americans and not just to pregnant women, children, seniors, disabled people and some parents as was the standard prior to the law’s passing.

On June 28, 2012, the Supreme Court of the United States released its opinion on National Federation of Independent Business v. Sebellius, which not only ruled that the individual mandate was Constitutional, but also that the law’s requirement that all states expand Medicaid was an overstep and fell beyond their powers. Accordingly, it was up to the states whether they wanted to expand the eligibility requirements of Medicaid and if they did, they would receive more money from the Federal Government to fund the program for those newly eligible Americans in addition to the other monies they already received from the Federal Government. There are a number of ways that the Federal Government presently funds the Medicaid program and those ways will be outlined in detail below after explaining Mr. Trump’s position on the matter.

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